This is the Real Estate Shop where each episode will bring you a top industry expert to share their
current programs or projects that are making an impact in our communities today. Be sure to check
us out on Spotify and Apple podcasts. Welcome to the Real Estate Shop. Today we have guests
representing the city of Pittsburgh, Derek Tillman from Bridge the Gap Development and Sabrina
Miller representing the Uptown Hill District. Kicking things off, we'll start with Derek. Derek,
tell us about your background and how you transitioned into your current role.
Sure, sure. So thanks again Stephen, Kervin for inviting us to join you today.
As you said, Derek Tillman, President and CEO of Bridge in the Gap Development. We're a real
estate development firm founded in 2006 and my journey to this point has been, so I actually
graduated from University of Pittsburgh in 2004 and upon graduating I couldn't find a job,
graduated with a degree in information science and it was discouraging, a very discouraging
moment, but while in college I was in a leadership development program called Coral Center for Civic
Leadership. While in that program we met a lot of different leaders throughout the city and different
sectors, education, government, business, etc. And one particular gentleman took a liking to me,
we developed a relationship, he later became my mentor. So I reached out to him, his name was Gray
and just talked about my frustration after graduating, growing up in Section A housing,
really feeling like this, things would get easier with a full-time employment.
So talking about my frustration, he said, you know what, I'm going to help you. So he set up some mock
interviews with him and some of his friends and colleagues in different industries and the thought
was that, you know, I can get some feedback, you know, kind of during these mock interviews and
potentially opportunity will come from it. So we did that, I met some great people, but ultimately
at the end of it I was unemployed. So Gray said, you know what, I'm gonna allow you to come work
for me. So my first job actually out of college was working for Gray, he was a retired corporate
executive from Equitable Gas and also had a small real estate company with him and his son. So I
went to work for him, helped him with a lot of board work, non-profit boards, for-profit boards
that he was on and he had a small real estate portfolio of non-performing assets, basically
vacant properties. So I served as this project manager to get those properties back up and
running, helped hire the subcontractors, managed the projects, but then I also did the property
management on a backend, that was one of my earliest experiences. I got my real estate license
also shortly thereafter and I started to sell real estate, really kind of developed the
investor niche, worked with a lot of first-time home buyers, but also
a lot of investors locally, nationally, ballplayers, etc. And I was learning a lot from my clients,
kind of what they were doing right, what they were doing wrong, how they were structuring deals,
how they were getting money, how they were getting financed, and you know just became a point of
learning. I bought my first property and you know it was really intended to be a flip,
but it didn't sell. And again, another discouraging moment, but learned a lot throughout the process.
Fast forward, after buying that property, I basically couldn't go back to the bank to get
money to do another one, so I went back to Greg and said, you know what, how about we come together
and take this to the next level. He said, let's do it. So we co-founded Bridging the Gap
in 2006. We bought two more properties together, one we sold, one we rented, and I really saw this
as the pathway towards growth. I wasn't really thinking development, I was just trying to be a
real estate investor. In 2007, an opportunity landed in his lot to own a restaurant at the
Pittsburgh International Airport. Neither one of us had restaurant experience and he asked, hey,
you want to be a part of it? I said, yes, I'm going to be a part of it. He said, okay,
absolutely. And I saw this as another pathway to also invest in real estate. So we took that over,
we hired our own restaurant manager, and here we are off to this journey. I helped negotiate our
commercial lease with the airport authority. There was a union, so we negotiated a union contract,
a lot of great experience. 2008, there was a recession. President Obama got into office and
there was an opportunity to do weatherization, the process of making homes more energy efficient.
So I branched out from Greg, started a weatherization company with another gentleman
from my church. And basically, we took a $40,000 investment, built it into a million dollar
business in the first year, a multimillion dollar business over the next few years.
I started around 2012, we started to not see eye to eye with my partner and decided to sell my
interest. But prior to that, I got married in 2009 and we were investing heavily in real estate
because weatherization was so profitable. We're buying properties cash, doing some owner finance
and built a pretty sizable portfolio. When I exited the weatherization company,
I also, we bought a 20 unit. So basically around 2013, I came to a crossroads and it was like,
all right, do we build this company into a couple hundred units, maybe a couple thousand units,
cruise off into the sunset or go into this heavily political world of development?
And what really helped me make that decision was I thought back to my childhood, growing up,
in section A housing, moving a lot all over the city, being displaced by landlords, seeing
developers come into our community and not really respect the community or the people that live
there, seeing family members displaced, as well as, you know, just all the professional experience
I had had, had had up to this point in selling residential, also sold commercial real estate
somewhere along this journey. Weatherization, I had rehabbed close to a hundred units at this point.
You know, just all these collective experiences, I knew between that and also the opportunities
that I could create will be a lot more than I could just being basically a large landlord.
So it became clear to me that I was to go into development because I could serve more than just
me, my wife and a few subcontractors. So it became more of a calling. And that's how we got to where
we are today.
Wow, man, a lot to unpack there and a lot of lessons along the way. The value of mentors
and relationships, that knack for just making a decision and figuring it out, like the airport
situation, just like went for it. So that's good stuff. Really appreciate that.
Sabrina, we'll switch to you. Tell us a little bit about your background and how you actually
started out and got to the point of where you are now.
Sure. So I'm Sabrina Miller. I'm the real estate and development program manager with Uptown
Partners. So I've been in the state of Pittsburgh for six years as of this past January. And
how I ended up here and the journey to where I am now is I think is an interesting path. So I'm a
transplant from Detroit, Michigan. And following my college years, I knew that I wanted to go into
public service and I didn't know what that looks like. I had explored the Peace Corps and then I
finally landed on what could be referred to as domestic Peace Corps, AmeriCorps. And so I came
to Pittsburgh to do the state and national branch and I did that for six months and realized that's
not what I want to do. That's not how I want to give back. It didn't feel like me. And so I
became a member of AmeriCorps VISTA, which their programming and they place people in spaces where
we can affect some change with regard to economic development. And that was a really interesting
effect. Some change with regard to economic development. And that was where I was like,
this is how I give back. So I was at an organization called Pittsburgh Community
Reinvestment Group and they had tasked me with writing a best practices guide for
the Pennsylvania Abandoned and Blighted Property Conservatorship Act, more commonly known as
conservatorship. And essentially that is a program for helping individuals, community groups,
municipalities, et cetera, now land banks, identify blighted and abandoned structures and
put them into productive reuse. So I ended up realizing that there were no best practices for
that at the time and ended up writing a publication that went statewide about its use, some narratives,
some examples, some wins and resources and then specifically, which I still focus on to this day,
is policy recommendations. And once that was over, that year of service was over, I got into
community development with some nonprofit boards in my neighborhood and was continuing to pro bono
consult municipalities and community groups around conservatorship and how to use it.
And then in 2020, ended up starting a company, a residential contracting company. And
the following year I decided that I wanted to get involved in community development from a
legislative side and decided to run for council. In that same year, I realized I really want to
do this, work with the team and have some greater and focused impact. And I knew I wanted to go back
to work full time in addition to the other endeavors I had embarked on and
ended up applying for this role with Uptown Partners as the real estate and development
program manager and came onto the organization in June of 2021. And in this role, I essentially
manage the built and unbuilt environment, both private and public and identify opportunities
and creative ways to address challenges with regard to real estate and development.
In the Uptown neighborhood of Pittsburgh. Got it. That sounds good. So,
Kerber, you want to take it from here? Yeah. Sabrina was telling Derek that my wife is from
Pittsburgh. She's from Pent Hills. And when we were dating, it was like we're in Pittsburgh every
other month. So I got a good chance to explore the neighborhoods and to kind of see how it has
evolved over the past, I would say, 12 to 15 years. And I think that's what I've been doing
years, particularly around, you know, the Hill District and Homewood. So it's amazing to watch.
Now, given the development that's happened, how many of that is being, how much participation is
being represented by minorities in Pittsburgh? Do you have a sense of what it's like? Is this a
question for me or Derek? Or both, if either of you have an answer, some thoughts around it? Sure. I
mean, I can speak from the Uptown perspective right now. We're seeing the neighborhood is like,
I would estimate around like 1.5 rectangular mile. So it's a small neighborhood amongst the collection
of neighborhoods that make up the Hill District. But in Uptown alone, we have six large scale
developments that are black lit, which is exciting. And I've been asked the question quite a bit.
I'm like, how did that come about? How did you facilitate that? And I really did not facilitate
that. And I think this is a proper, it's just a unique opportunity. Uptown has been overlooked
for quite some time. And we have some amazing incentives. It's a key location. And I think that
this is a perfect opportunity to have Derek kind of speak to that as one of those six
black developers who are leading large scale development in the Uptown neighborhood.
Before Derek jumped in, Sabrina, do you mean explaining like how close Uptown Hill District
is to downtown and what that area looks like? So people can visualize it.
Yeah. So Uptown is the connector. Some people have been calling it a pathway to progress or
of progress. And it is situated between downtown and Oakland and also about two minutes from the
Southside. So it's that puzzle piece that's being, you know, finally is being put into place to
create that Uptown or downtown, Uptown Oakland District. So yeah. What's the demographics like?
If you exclude the Allianz County Jail and Duquesne University, we do have about an even split. So
sometimes it teeters. It's about 49% black and 51% white the last time I checked. So it's a pretty
even split. Yeah. And I would just say, you know, there are unique neighborhoods like Uptown
where you're seeing black developers, minority developers participating more.
And, but most of the city is not being done or there's not much participation from black
developers. In other communities where you have seen things include Larmer, the Hill District.
And I think one development was done by a black developer in Homewood. But again, primarily
it is not being done by us, but there are really developer friendly neighborhoods and communities
where I would definitely include Uptown is probably number one. And the Hill District has
had times when it was, I guess, more friendly to developers and other times when it wasn't. So it's
somewhat, it almost depends on the time, but you know, we're here. We continue to make our presence
felt and continue to move forward despite the challenges that exist. Wow. So that's like seven
black led developments. How much other development is going on within, I guess, just within that
district? Most of the neighborhoods, seven would be black led. And I think that's the
most neighborhoods, seven would be pretty much like amazing. But apparently there's more development
than just that, or it's pretty much all the development being done right now, large development
being done by black developers in that district. Yeah. So in Uptown right now, I am very proud to
say that I've worked on, provided letters of support, or been closely tied with developers
from the conceptual stage through, were they getting to the point where they are getting their
planning approvals. And so right now I'm working on about 16 different developments. And they range
from small scale, mixed use development, like one occupant and maybe two units of housing,
all the way up to 260 unit multifamily development. And then even things like the, like just last week
we did the ribbon cutting for UPMC's new international vision and rehabilitation tower. So
Duquesne University also has its new College of Osteopathic Medicine that's being constructed
right now. They're doing a new 229 unit development. And then there's just a lot of housing
being proposed that I'm including in our Uptown development pipeline. So there is
a substantial amount of development happening and it's hard because, you know, as the person
who manages the real estate development for this neighborhood that's in such a transition period,
I go through the neighborhood and can see like it as a rendering where I can see the stuff being,
you know, I know that's going to be there in the fall. I know that breaks down here
and it's hard to tell that story because I can't get people into my head. So I did recently,
and I will be launching this week, an interactive development pipeline map where people can see,
highlight it, what's coming, what's been approved, and then click on it to learn more about the
projects. So we are seeing a great deal of development. I'm happy to be a part of it.
Derek, you talked about your pathway into development. Just to drill down a little bit
and go back to that first development deal, could you kind of just go back and talk about,
you know, the challenges that you had on that deal once you made up your mind you were going to kind
of scale past, you know, a large investor and really go the path of the developer?
Sure. So what we recognize is that, you know, in looking at individual projects,
you know, they were small, but in aggregate, what we had done in aggregate was, you know, substantial
and was equivalent to, you know, substantial projects. So we had to leverage those 100 units
that I had done of, you know, duplexes, single families with the largest being a 20 unit,
in addition to the weatherization where we weatherized over 900 homes. So I was able to
leverage that from an experience perspective because, you know, that's always one of the
biggest things is experience and then also being able to support the guarantee and liquidity
requirements. That also gave me leverage because I had built a portfolio as it related to net worth.
So I actually had a pretty good net worth and some experience that I could leverage.
Where I was lacking was the ability to sign guarantees and also liquidity. But
I spring boarded from there. We did our first LIHTC deal. We submitted in 2016, completed it in 2018
and it was a 36 unit. It was a 9% LIHTC deal, Long-Cum-Housing Tax Credit deal,
36 units ground up construction project, about a 12 and a half million dollar project. And
our goal was, it was done in the Hill District, just up the road from Uptown. Our goal was to
really to, you know, bridge a gap, but also kind of raise the bar as it related to affordable
housing from a design perspective, energy efficiency perspective, as well as supportive services.
But that was that first project that we were able to get completed. But we definitely faced a lot of
challenges along the way. We worked with a development consultant. They were definitely
helpful. But it was kind of that in addition to the experience we had and then we had to be creative
as it related to meeting the liquidity and guarantee requirements. A lot of investors tried to
force a partner on me and tried to force a partner kind of down our throat. But I remained
resolute that, you know, we had come so far and we didn't need a partner. And we stayed true to that.
That's amazing. And I know that's what some folks will want to focus on.
Because, you know, early on, scalability has kind of been JV in your way with the partner who's
going to take the majority of your developer fee, which is pretty much the profit motive in an
affordable tax credit deal. How were you able to, I guess, work around the liquidity and the
guarantees? Because they would actually be coming from requirements from PHFA, as well as I imagine
the equity investors, you know, if you guys had any debt on it, you know, they also have their own
guarantee requirements and network and liquidity. So that's a huge chunk. How were you able to do that?
Sure. So it's complicated, but I'm going to try to give you a short version, you know, kind of a
collective puzzle that we had to put together to do that. So the first was, as I go back to experience,
I have rehab over 100 units. So I was able to list that as experience, whether it was over 900 homes,
was able to list that as experience. So that was the first one. I had built that portfolio that,
you know, me and my wife built over that time. So my net worth actually met the requirements from a
net worth requirement. So those were kind of check check. They, you know, they were kind of
checking me. So those were kind of check check. They, you know, still tried to pick at those things,
but we were largely able to get past it with that as it related to. So when we put out, we wanted
tax credits, we put it out for pricing and we were getting horrible pricing. This was before,
you know, Trump. So this is when pricing was pretty much at an all time high. So we couldn't
find an investor or we were getting whack pricing, or they were trying saying, we'll do your deal,
but you have to partner with X. So we continue to put it out there to more and more investors.
We were able to, through a relationship, stumble onto First National Bank, who's now building
their corporate headquarters in the Hill district. But this was early on when they had, they had
purchased a bank locally. They had a huge CRA need and they really needed me just as much as I
needed them. So we were able to align ourselves. And typically you have a syndicator that finds
your investor. In my case, my syndicators weren't really finding me investors other than, and the
ones that were saying he has to partner. So we actually found our own investor just through
personal relationships and that ended up being huge for us. So I negotiated our pricing directly
with the investor and I was trying to get them to do the deal direct to essentially eliminate
the syndicator and not have as many folks I have to answer to. But because they were new to the
world of LIHTC, they weren't in a position where they could do it direct. So they were saying we
needed to work with a syndicator or they needed to work with the syndicator. And they asked if we
hadn't been talking to anyone. And I said, yeah, there were a few. One seemed to want to do the
deal a lot and they said they could provide us with pre-development capital, which turned out to
not be true. So we ended up bringing them into the deal. And they caused me a lot of heartburn
as the time went on. Even though we brought them into the deal, things were seeming to progress.
And then we kind of came to a crossroads where the deal was halted. We came to an impasse,
they were trying to force us to do something that we weren't comfortable with. And we were at an
impasse. I actually met another black developer at the Pennsylvania Housing Alliance Conference.
And we started to talk about our deals. And we shared each other's LOIs. And what I noticed was
there were components where they were requiring a lot more liquidity from me and less
liquidity from him, or a lot more net worth from him and less net worth from me. So we actually
used each other's LOIs to then go back and negotiate with our syndicator. It was funny
because the syndicator I was working with saw us talking at the conference. And it was almost like
he saw a ghost. And we went back and that actually, it was almost like iron sharpening iron. So we were
able to use that. And then kind of fast forward, they decided to go ahead and move forward with
their deal despite the impasse we had been at for some time. How we overcame the guarantee requirement
is that we got our construction company to sign a construction completion guarantee. It was a large
construction, billion dollar construction company. So essentially we leveraged their balance through
completion. And then that guarantee fell off at completion. And basically my developer fee,
our portion of it was intended to stay in until stabilization. So that was our secret sauce.
Of course I signed the guarantee, but that wasn't what was really holding the weight. It was the
strength of the general contractor in addition to ours, coupled with the experience I had,
coupled with the net worth that I had that all kind of collectively fit all those puzzle pieces
to get us over the finish line. I'm glad to hear that because people, I mean, always tell me the
alternative of getting the contractor to come in and guarantee the completion. And I've yet to
really hear a deal where that totally worked. Did they want a large guarantee fee for that or just
a modest fee to do it? I'm sure they probably requested something in exchange for the guarantee.
No. So I had come from the, I had sold real estate as an agent,
residentially and commercially. So I really came from a negotiation background. And my
perspective was you're getting the GC fee. I'm bringing you into this job. You're making money
on that side. This is how I make money. So I felt like the carrot was enough with the fee on
construction. So that's what we landed on. So I didn't have to pay them any additional monies
to put that forth because they already were signing a lump sum contract. So it really wasn't,
at least from my perspective, much more than what they were already signing and providing.
It was just, you have to finish the construction and then this falls off and essentially you get
all of your fee. So we negotiated in a way that it didn't cost us any additional funds.
But I do know that there's GCs that essentially try to require more. I think you have to stick
to your guns and understand that you already have leverage with the construction contract as it is.
Wow. Good stuff. Derek, you mentioned that you worked with your wife. What's that like?
Yeah. So we had a separate company that was doing property management as well as kind of managing
our own portfolio. And she was working with me doing some administration and some things early on.
And it was fine early, but she didn't really like it, didn't have a love for the business.
And I always knew it was going to be short-term and she knew it was going to be short-term as well.
But then we started to have children and decided that she would be a stay-at-home mom for a period.
So it was really during that time where she transitioned out and we kind of took things
forward from there. So it served a purpose for a period because we couldn't afford to pay anyone
at that point. But it was, I don't think it was ever intended to be long-term.
Gotcha. And you still have your own property management business?
No. As time went on, I realized that was the least part of the business that I liked.
And we probably still manage a few little small units, but largely we've transitioned everything
over to a third-party management firm. All of our tax credit deals, everything we're doing
that's in our pipeline now is going to be with the property management firm. And I'm selling,
sold most of the smaller portfolio that we started with. So eventually, that'll either be sold or
transferred over as well. But we're not really doing any property management these days.
Okay. So I know everything, every deal was different. And you mentioned the challenges
that you kind of had to work through on your first deal. Do any of these challenges still exist
today? Because I have developers telling me that particularly the challenge of guarantee and
network and liquidity, obviously they're on every deal, but there seem to be challenges on every
deal that the folks I talked to end up overcoming. How's that worked for you with some of the deals
you do today? You're still finding the same challenges? We are. And largely because even
though we were able to get that deal done, at every stage, my developer fee was always kind of
held hostage no matter what it was. So by the time we finally got it, it was so kind of diluted down
over a period. We had to kind of borrow money to get to the next phase that when we got it,
we were kind of paying back the bridge loan that we got. So it positioned us to move forward
from an experience perspective, but not really from a liquidity or wealth building perspective.
So we moved forward and today, pre-development, it costs hundreds of thousands of dollars to move
a deal from conception to completion, or even from conception to construction start. So pre-development
remains a challenge, especially if you're doing multiple deals. The guarantees still remain a
challenge, as well as the liquidity requirement has actually increased. So we're having to be
creative by finding CDFIs locally, nationally, or syndicators or investors that have platforms
and programs set up to help minority developers. Enterprise being a good one that we've been able
to connect with their equitable path forward fund. So we have to basically kind of scour the nation
and find things that align with what we're trying to do to help us with various components of the
deal. The other is to find lenders that have more creative terms, whether that be interest rate or
cash flow loans, soft loans that really help deals work. That's kind of another thing.
And then unfortunately, I can't just be a developer. I also have to be a leader as it relates to policy.
So we are advocating for things like the Pennsylvania Opportunity Developer Fund
that PHFA is working to institute. So that, but then there's other resources locally,
as well as at the state level, really advocating, pushing, helping to design new platforms
to really help aid minority developers with their deals, whether that is pre-dev, gap financing,
soft loans, or equity, because largely the equity market is not available to us. There was a New
York Times article that was published a few, maybe a month or so ago, that said out of $82 trillion
nationally, trillion with the T, less than 1.3% goes to Black and Brown developers. And actually
that number includes women. So 98.7% of $82 trillion goes to white men. So basically the equity
market is not there for us. So it's all these different things that exist locally, nationally,
that we have to tap into to help us as we move forward.
It's interesting enough, Kerber and I, we did a National Equity Fund last week, and they also have
a fund for Black and Brown developers. Of course, they're syndicators. And the idea is great. They
do a guarantee stop, meaning they'll guarantee completion, but you have to have an allocation
because obviously, you know, they're syndicators and that's what they do. And it's kind of like
the chicken and egg, to get the allocation, a small or starting out developer run into what you just
talked about, the guarantees, the liquidity, the net worth, the experience. So a lot of those
developers can't even get to the allocation to take advantage of what, you know, NEF is doing.
It sounds like something that you might even be able to take advantage of since you've been
successful in getting allocation, but interesting that you bring that up.
Absolutely. Absolutely. Let me just ask, go ahead, Kerber.
Sabrina, given what you're doing in Uptown Hill District, what's kind of a pitch where
you're telling developers to try to lure them into doing work in your community? Are you looking
for primary local developers or are you also soliciting out of town developers to look at
your, you're a partner of Pittsburgh? Yeah, so I've kind of recently, over the last maybe
six months, switched my strategy in terms of actually not just being on the receiving end
of developers saying they want to invest in, just because of the way some of the policy in the city
is set up for registered community organizations like ours, developers have a responsibility
and a requirement to engage with community groups. But I know the neighborhood so much and what's
going on because I'm so intimately tied to everything that's happening here that over the
last six months I sort of switched gears and instead of being on the receiving end, like
of just vetting developments that come to us, as I had mentioned, but now shifting and going to
court that development based on the things that I know. So, you know, Uptown is so unique and we
have some of the more recognizable and larger stakeholders in the region and state located
right here in our neighborhood from Duquesne University and we have a national hockey league
team by way of the Penguins and UPMC, as I mentioned before, and their new international
hospital. Just some of our utility companies have a strong footprint and visible structures that are
coming up here and then we have that transportation and mobility piece, and we have a lot of
utility companies that are going to be able to get that
utility piece through the new bus rapid transit system that'll be going into Uptown over the next
about year, year and a half. And so oftentimes you're talking to like right now I really want to
core life sciences, more life science companies into the neighborhood to add that industry
component and create like a hub here, especially since we're so closely located to Oakland that
they're doing with the innovation district there. It's a make sense place to want to start to
establish especially as we see the housing. What is the innovation district? So there's
innovation district program that's happening in Oakland but Uptown is also the, is touted as
being the world's first eco innovation district. Okay. So I want to build off of that, like where
is the innovation part of that in conjunction with all the other assets that I just named that are
real draws to industry and new businesses and startups and also just people who want to be in
the next neighborhood. So some of our neighborhoods are pretty much complete. We think about the strip
district and Lawrenceville and Oakland and downtown with its challenges and Southside with its like
this Uptown is not what's next is what's happening. And so telling that story is
an understanding development is a way that I'm starting to want to put together this thing about
how do I go and seek that? I know what the needs are. I know what the concerns are. How do I go
and seek that? And I think one of the, another component that I've been glad that I've been
leaning into more is that there is a community perspective and desires for certain types of
developments and affordability components. But then there's also, as Derek was mentioning earlier,
there are some challenges that I think community groups must understand when it comes to trying to
leverage givebacks from development. So understanding construction costs and interest rates and
some of the obstacles faced when trying to put affordable units into a project, when affordable
units cost the same much to develop as a market unit. I think it positions community groups to
speak from a place of experience and knowledge, whereas they can be more partnerships and more
so of an ask and a give type relationship. And so that is where I'm at right now. And I've really
been leaning into just understanding the developer standpoint so that I can advocate for the
neighborhood that I work for even better. And the Uptown Hill District is pretty walkable.
How are you thinking about your retail strategy? So most of the developments that have come through,
at least four of them, they've allowed me to embed myself on their projects because I'm able to
help them understand the landscape, entry points, pairing them with affordability consultants like
Steve to talk about this is a market development. What are some alternative strategies to
putting affordability into my project? That's an example. Because of that relationship and that
trust building and me creating myself as a resource while still standing firm on what the
community's values are. A few of these products have allowed me to embed myself onto them. And
so I know what some of the things are that we need. So for one of our projects, it'll have 6,600
square feet of retail space. We've worked out informal, but definitive agreements around
a grocer being put into that space. And the Hill District being commonly known as a food desert,
we'll see another market go in at some point in the upper neighborhood of the Hill District. But
we're also slated to see that same type of investment. So I can identify a concern.
I can understand the solution based on that concern and then kind of gear them towards what
to fill that retail space with. And another property that's going to have 12,000 square feet
of retail space, a block size development by Alpha Residential. It'll have that 12,000 square
feet of retail space. And one thing when you start to think about a development, it's that there's
the design components that are really important. There's the retail that's important, how
accessible it is, the units are to people from a range of different incomes. All those things are
important. But when you're placing that building into a neighborhood, it needs to connect with
the neighborhood. And so with the Alpha project, I really spoke to them about like,
early on, the building doesn't feel to connect. We got to this really great point where it does,
and that's because it didn't have a theme or a soul to it. How does this tie into the neighborhood?
And so health and wellness in conjunction with the bus rapid transit system and the bike lanes that
come from that, their retail space is currently going to be focused around that component and
elevating that in the neighborhood. And because I've been able to, so I've been pairing them with
property management and businesses that would be a great fit, specifically minority and black owned
businesses as well. So it's being an asset, I think, and creating that partnership, that is part
of the retail strategy. And also just getting a hold of these blighted and abandoned commercial
structures that line our corridors on Fifth and Forbes and figuring out productive ways of reuse,
contacting the owners, figuring out if conservatorship is the right tool, understanding
people who want to buy and getting them in contact with the owners, those types of things. So this
is whole thing that when it comes to community development, these different components, but it's
really about strategic and intentional partnerships. And being close to universities and student
housing part of the plan at all? Yeah. So another master plan called for about 630 units of student
housing in order to offset, you know, some of the needs and strains from students who
need to live in the neighborhood to be close to the university, but it can be a strain on our
residential cores. In Uptown, partners will have been partnered directly on projects that have met
that five-year timeline to do such. So Duquesne University will be building, is building a new
229 unit dormitory, a collaboration with Fountain Development that'll be doing two separate buildings,
one complex. They'll be bringing 260 units. And then some of the other, you know, smaller 51 unit
market rate developments have lent themselves to students. And so those are almost at 100% capacity.
And so we'll reach that 630 units of student housing or housing that targets students or entry
level workforce within that fifth-year mark if we exclude some of the time lost with the
pandemic effects. And these are mostly local developers? No, it's a mix of local and out of state.
Okay, gotcha. Just out of curiosity, you know, this could be Derek or Sabrina, does the city of Pittsburgh
really offer incentives for affordability? I know it seems like for the Uptown District,
inclusionary zoning is not one of the things that they actually offer or sounds like not even
say real estate tax abatement, but that just for the Uptown District or does, are there other sections
of the city where, you know, these tools are used by the city or they just don't do it citywide in terms of incentives?
So there are no requirements for affordability in the city of Pittsburgh. I mean, there are some
neighborhoods that are, I would say, piloting inclusionary zoning, but there, I mean, I think
for us, there are no, there's no requirements and I think that's what makes it, and
that makes it tough for us to make these requests from market rate developers to instill affordability
into the projects when there aren't really, I think, streamlined ways to access incentives.
But I think Derek would be great at speaking to that specifically.
Yeah, just to piggyback on that, there's only one neighborhood that has an inclusionary zoning overlay
and that's Lawrenceville. It's a 10% requirement, but that's, you know, pretty much, it's a neighborhood
that's been gentrified. It's pretty much 100% market rate at this point, so they kind of had to do it,
but there's nothing like that that exists in any other part of the city of Pittsburgh. As far as
other incentives, like as far as financing, gap financing, the URA has some programs, so they have
a housing opportunity fund that gives out $10 million a year to help preserve and create more
affordable housing, but only $4 million, about $4 million of that per year goes into gap financing
of affordable housing deals. The rest of it's for like, you know, down payment and closing cost
assistance for new home buyers and other forms of support. So it's just merely not enough.
There are a few million, in addition to that, at home dollars that the city or URA gives out,
but again, we have a close to 20,000 unit affordable housing crisis.
So although the gap financing that is a part of kind of the URA's budget is helpful,
it's not meeting the current demand. The housing authority is largely tasked with doing this,
and you know, they're not meeting it solely either. They do have some gap financing
available that you can apply for. It's RFP released every year.
And it's basically a project-based voucher and gap financing RFP. So this has also been another
helpful tool. But part of the problem is none of these things are aligned. You get one, but then
you still have a gap, and then you may not get the other one. So the misalignment is really hurting
us and it's really hurting our city. But in addition to that, we need a lot more resources
than was currently available. Yeah, I hear you. At least you get project-based vouchers. They
don't even offer that in Philadelphia, which really makes it tough. But I guess we'll go in
and start looking kind of looking forward, starting with Debra. In terms of how many units
you have now, what are you looking to do in terms of scaling your business? And at some point,
if you haven't already, are you going to move beyond the Pittsburgh geographic?
Sure. So we have quite a bit of deals in the pipeline slated to start construction this year
and then several others in subsequent years. But I'll just mention a few.
So we're working on a project right in Uptown in the neighborhood that Sabrina does her work.
And it is a very important corridor known as Fifth and Dimwitty where we're developing both
sides of the street. So one side is an office building. So 20,000 square foot adaptive reuse
of an existing building. And then we're adding a 20,000 square foot addition. So it's a 40,000
square foot building. We'll include office space, co-working space for small businesses.
We're slated to have a coffee shop. And then we're also thinking about that economy that
Sabrina talked about. We're doing a training center focused on clean energy jobs.
So teaching folks how to install solar panels, EV charging stations, et cetera.
Directly, and that's a new market tax credit deal, directly across the street from that,
we're building 171 units, mixed income housing. A minimum of 50% will be affordable.
It's two buildings connected by a sky bridge, but it also in building one also has 12,000
square feet of retail. So it's a very complicated deal, condo structure, et cetera. Just up the
road, actually across the street from our other latex deal, we're renovating adaptive reuse of
a former school, the former Miller School, which will be 41 units. This is an 80-20 deal, 80%
market, 20% affordable. So just a few things. Again, there's other things in our pipeline,
but those are our priority projects for this year. We definitely have been invited to participate in
some other markets. One that I'll mention is where Sabrina comes from, Detroit. So we've been
talking to some folks about doing some things there. I do have interest in the DMV, but I think
again, others, we've had conversation in other states, but the one that we're looking hard at
actually doing something outside of Pittsburgh or even Allegheny County most likely will be Detroit
first, but we got a pretty healthy pipeline here in Pittsburgh.
Why Detroit there?
One, we have some grassroots relationships with some people there on the ground.
There was a need. We were able to bring our vision as it relates to bridging gaps,
bridging gaps of opportunity and bridging gaps in development. Through that relationship on the
ground, we've been talking about being able to bring our work and our services there.
In addition to some of the folks that we work with locally also have offices
in several markets, but one includes Detroit. They seem to be minority developer friendly,
so not just developer friendly, but minority developer friendly. Those are some of the things
that we've been able to bring to Detroit. We've been able to bring in some of the folks
that we look for before actually moving on opportunity in another market.
If you had to start over again, go on the path for development, is there anything
you would do differently?
Actually, I would not. The challenges that we had to overcome forced me to be more creative.
It also forced me to think about things in ways that just being able to throw money at it,
I would not have been as well versed and versatile. Also, we don't just do affordable,
we do affordable market rate commercial. Because of that, even if there's a down market,
just say for example, a market rate, we can focus on more affordable.
I wouldn't change anything, but as far as what I would change going forward,
it's having a major fund in every state available for just minority developers,
as well as a federal fund that's available for minority developers nationally. These funds being
able to be used in the form of equity, pre-dev, gap financing, soft funds, whatever your deal needs,
that's what I would change going forward. But as far as my path, I wouldn't change anything.
Sounds good.
Yes. What are your goals? We'll let the term come and wrap it up. Do you have any desire to break
into development yourself or just what are your goals for yourself as well as the district?
All paths that I've been following since I came here have all started with something to do with
real estate from when I wrote the conservatorship law to where I am now, working very closely with
developers and identifying opportunities and addressing some challenges that have to do with
real estate development as it pertains to uptown. Every path, even in the residential general
contracting business that we have, all things have to do with development. I think I'm already in it.
What does it look like moving forward? I just want to see how this unravels. I really am interested
in the relationship part of it, connecting the dots, getting people to the point where the development
comes up. I think that is a good lane for me, at least in this moment right now, to help streamline,
provide resources, get developers to understand the community perspective, educate community groups
on the developer perspective, keep making those strategic partnerships and connections, and to see
this stuff happen more quickly and still responsibly. I'm in a great space right now.
But anything can happen. I'm really enjoying learning the developer perspective right now.
Sounds good. I guess if you... This pathway, and I actually have to get to Pittsburgh.
We were talking before. I went to Indiana University of Pennsylvania. I've been to the hill,
had friends there, but certainly that's been many years. If you could project out five years,
the Uptown Hill District from, I guess, a perspective of five years out compared to what it is now.
Yeah, so with Uptown specifically, I think Uptown is the catalyst for change in the hill district.
I think just the way that Uptown Partners has pivoted and become partners of other community
groups in the hill and getting to know people and get our story out and really
telling around those assets that are integral to, I think, Pittsburgh's growth, just that transit and
the medicine, education, the housing, the retail, all those things that are in our pipeline, I think,
will be the catalyst for change that the hill district has desperately needed for quite some time.
Then there are other significant projects happening in the lower hill as well that I think
play off of one another. In five years, I expect this to be a population, specifically in this
neighborhood, that's probably triple due to the housing that's coming here. But I see it as one of
the... I see Uptown as one of the integral parts of Pittsburgh and with people and
foot traffic and an identity that's clear to people. I see that and I see tech here and
it making sense about life sciences and why it's in this neighborhood. I'm hoping that
there's more opportunities for equity. We talk about affordable housing and the units.
I'm really hoping that there are opportunities for entrepreneurship and getting into some of these
blighted and bank it structures, commercial structures. I've been having those conversations
as early as this morning, what that looks like, and more ownership of the neighborhood in a
responsible way. Avoiding some of the mistakes that I think happened as communities started to
see investment and really there was no model to look for how to do that responsibly. Doing this
in a great way, especially as we see all this market rate. More housing, more innovation,
more industry, more people, and more acknowledgement about how Uptown is that puzzle piece that's going
to help connect downtown Oakland and the Upper Hill neighborhoods. That's what I see. That's my vision
and it's happening. That's awesome. I think what you just laid out really lends itself to a really
vibrant community. I think what Marimba is doing too in the Hill District, it just adds to that.
I think it's going to be Pittsburgh's going to look differently in the next couple of years. I
think with the anchors that are already there, Carnegie Ballot, University of Pittsburgh,
Strip District, PNC, FMB, you've got the sports teams within walking distance here to your
neighborhood. It's really attractive for tech companies, I think like you mentioned before,
and for larger companies to move in because you get the talent space there and just you got quality
housing for your employees. It really makes it a real attractive city to be in. I'm glad that you
guys are the forefront of that. What's some ways that developers can get in contact with you if they
are interested in Pittsburgh and want to explore some opportunities? I can be reached at
smiller at UptownPartners.org. I'm happy to have those conversations. And the interactive map is
going to be on your website? Yes, it will be on our website and then on my LinkedIn and on the
Uptown Partners platforms as well. I'll be pushing it out there as well. And Derek, I know a lot of
the syndicators and direct investors are probably interested in talking to you going forward.
Should they just reach out to you via the information on your website as well?
Yes, they can reach out to me on my website, LinkedIn, or via email at DT.com.
Or via email at Detailman at BTGdevelopment.net. They can find me. All right. Awesome. Thanks,
guys. Thanks for the good time. Steve, got anything to say? No, absolutely. Appreciate you guys
joining. I will say for Sabrina, regarding the life sciences, Philadelphia basically leveraged
University of Penn and Drexel University. And they literally created the life science industry
in Philly, which is a top 10 industry. And it's actually the only real thing going in terms of
commercial real estate in the city. And I know you guys have great universities there. And if
they haven't started, they're definitely the folks to knock on their door. But glad both of you guys
can join. We will be back in touch. And thanks for being on the shop. Another day at the shop.
And content they can't get anywhere else.